In contradiction to the classical economists, who took as their starting point an already-formed capitalist mode of production and took the existence of a class of workers as something given and self-evident, Sismondi emphasizes precisely the process of ruin of the small producer—a process that led to the formation of this class. That Sismondi's indication of this contradiction in the capitalist mode of production constitutes a merit—this is indisputable; but the fact is that, as an economist, Sismondi was unable to understand this phenomenon, and concealed his incapacity for consistent analysis behind "pious wishes." The ruin of the small producer proves, in Sismondi's view, the contraction of the internal market.

"If a manufacturer will sell cheaper," says Sismondi in the chapter on "how does a seller expand his market?" (ch. III, livre IV, t. I, p. 342 et suiv. [38]) [39], "then he will sell more, because others will sell less. Therefore the efforts of the manufacturer are always directed toward making some saving on labor or on raw materials, which would give him the ability to sell cheaper than his competitors. Since the materials themselves represent the product of past labor, any saving in them always reduces, in the final analysis, to the use of a smaller quantity of labor in producing the same product." "True, the individual manufacturer tries not to reduce the number of workers, but to increase production. Let us assume that he succeeds, that he beats his competitors out of customers by lowering the price of goods. What then will be the 'national result' of this?" "Other manufacturers will introduce his methods of production. Then one or another of them will, of course, have to dismiss part of the workers, to the extent that the new machine increases the productive power of labor. If consumption has remained unchanged and if the same quantity of labor is performed by a number of hands ten times smaller, then nine-tenths of the income of this part of the working class will be taken from him, and his consumption in all forms will diminish by just as much… The result of the invention—if the nation has no foreign trade and if consumption remains unchanged—will, consequently, be a loss for all, a decrease in national income, which in the following year will lead to a decrease in general consumption" (I, 344). "And this is how it should be: labor itself constitutes an important part of income (Sismondi has in mind wages), and therefore one cannot reduce the demand for labor without making the nation poorer. For this reason, the benefit expected from the invention of new methods of production is almost always credited to foreign trade" (I, 345).

The reader sees that already in these words we have before us the whole so familiar to us "theory" of "contraction of the internal market" as a consequence of the development of capitalism and the necessity, in view of this, of an external market. Sismondi returns to this thought extraordinarily often, connecting with it both his theory of crises and his "theory" of population; in his doctrine this is such a dominant point as it is in the doctrine of Russian Narodniks.

Sismondi did not forget, of course, that ruin and unemployment under the new relations are accompanied by an increase in "commercial wealth," that the question should concern the development of large-scale production, of capitalism. He understood this perfectly and asserted precisely that the growth of capitalism reduces the internal market: "Just as it is not a matter of indifference to the well-being of citizens whether the comfort and consumption of all approach equality, or whether a small minority will have excess in everything while the mass is reduced to bare necessity, in just the same way these two types of distribution of income are not indifferent to the development of commercial wealth (richesse commerciale) [40]. Equality of consumption must always lead as a result to the expansion of the market of producers; inequality—to the contraction of the market" (de le (le marché) resserrer toujours davantage) (I, 357).

So, Sismondi asserts that the internal market contracts due to the inequality of distribution inherent to capitalism, that the market must be created by equal distribution. But how can this occur amid commercial wealth, to which Sismondi has imperceptibly transitioned (and could not but transition, for otherwise he could not speak of the market)? This he does not investigate. What does he prove regarding the possibility of preserving the equality of producers under commercial wealth, i.e., under competition between individual producers? He proves absolutely nothing. He simply decrees that it should be so. Instead of further analysis of the contradiction which he correctly pointed out, he begins to discourse on the undesirability of contradictions in general. "It is possible that with the replacement of small-scale agriculture by large-scale farming, more capital has been invested in land, that more wealth is distributed among the whole mass of agricultural workers than before"… (i.e., "is it possible" that the internal market, determined precisely by the absolute quantity of commercial wealth, has expanded? has it expanded alongside the development of capitalism?)… "But for the nation, the consumption of one family of wealthy farmers plus 50 families of destitute day-laborers is not equivalent to the consumption of 50 families of peasants, not one of whom is rich, but not one of whom is deprived of (moderate) decent comfort" (une honnête aisance) (I, 358). In other words: perhaps the development of farming does create an internal market for capitalism. Sismondi was too educated and conscientious an economist to deny this fact, but… but here the author abandons his investigation and instead of the nation of commercial wealth directly substitutes the "nation" of peasants. Dodging the unpleasant fact that refutes his petty-bourgeois point of view, he even forgets what he himself had said a little earlier, namely: that the "farmers" developed from "peasants" precisely thanks to the development of commercial wealth. "The first farmers," said Sismondi, "were simple plowmen… They ceased not to be peasants… They almost never employed day-laborers to work together, but only servants (farmhands—des domestiques), always chosen from among their equals, with whom they dealt as equals, ate at the same table… constituted one class of peasants" (I, 221). The whole matter thus reduces to the fact that these patriarchal muzhiks with their patriarchal farmhands are much more to the author's liking, and he simply turns away from those changes which the growth of "commercial wealth" produced in these patriarchal relations.

But Sismondi has no intention of admitting this. He continues to think that he is investigating the laws of commercial wealth, and, forgetting his reservations, asserts directly:

"Thus, as a consequence of the concentration of property in the hands of a small number of owners, the internal market contracts more and more (!), and industry is increasingly forced to seek markets abroad, where great upheavals threaten it" (des grandes révolutions) (I, 361). "Thus, the internal market cannot expand except through the expansion of national well-being" (I, 362). Sismondi has in mind popular well-being, for he has just acknowledged the possibility of "national" well-being under farming.

As the reader sees, our Narodnist economists say exactly the same thing word for word.

Sismondi returns to this question once more near the end of the work, in Book VII: "On Population," in Chapter VII: "On the Population which has Become Superfluous as a Result of the Invention of Machines."

"In the countryside the introduction of the large-farm system led in Great Britain to the disappearance of the class of peasant tenant-farmers (fermiers paysans), who worked themselves and nevertheless enjoyed moderate comfort; the population decreased significantly; but its consumption decreased even more than its numbers. Day-laborers, performing all field work, receiving only bare necessity, are far from providing such encouragement (encouragement) to urban industry as the wealthy peasants provided before" (II, 327). "An analogous change occurred in the urban population… Small traders, small industrialists disappear, and one large entrepreneur replaces hundreds of them; perhaps they were not all together as wealthy as he. Nevertheless, they, taken together, were better consumers than he. His luxury provides far less encouragement to industry than the moderate comfort of those hundred households which he replaced" (ib. [41]).

What then, it is asked, does this theory of Sismondi's on the contraction of the internal market with the development of capitalism amount to? To the fact that its author, having scarcely attempted to look at the matter directly, evaded the analysis of conditions corresponding to capitalism ("commercial wealth" plus large-scale enterprise in industry and agriculture, for Sismondi does not know the word "capitalism." The identity of concepts makes this usage entirely correct, and we shall henceforth speak simply of "capitalism"), and substituted for analysis his petty-bourgeois point of view and petty-bourgeois utopia. The development of commercial wealth and consequently of competition must leave untouched the even, average peasantry with its "moderate comfort" and its patriarchal relations to farmhands.

It is understandable that this innocent wish remained the exclusive possession of Sismondi and other romantics from the "intelligentsia," that it came every day into greater collision with reality, developing those contradictions the depths of which Sismondi was still unable to appreciate.

It is understandable that theoretical political economy, in its further development adhering to the classics, established with precision precisely that which Sismondi wanted to deny, namely: that the development [42] of capitalism in general and of farming in particular does not contract, but creates the internal market. The development of capitalism proceeds together with the development of commodity production, and to the extent that domestic production gives way to production for sale, and the craftsman gives way to the factory, so proceeds the formation of a market for capital. The "day-laborers," expelled from agriculture through the transformation of "peasants" into "farmers," supply labor-power for capital, while the farmers are buyers of the products of industry and moreover not only buyers of articles of consumption (which previously were produced by peasants at home or by rural artisans), but also buyers of means of production, which could no longer remain the same with the replacement of small-scale agriculture by large-scale [43]. The latter circumstance deserves emphasis, for it was precisely this which Sismondi ignored, speaking in the passage we cited of the "consumption" of peasants and farmers as if there existed only personal consumption (the consumption of bread, clothing, etc.), as if the purchase of machines, tools, etc., the construction of buildings, warehouses, factories, etc., were not also consumption, only of another kind, namely: productive consumption, consumption not by people, but by capital. And again one must note that it is precisely this error, which Sismondi, as we shall now see, borrowed from Adam Smith, that our Narodnist economists adopted in full integrity [44].